How to Make Money With an Android App

Though
the Android app marketplace has been playing catch-up to Apple’s App
Store since its inception, it has realized impressive growth in the past
few years. Revenue in 2013 totaled about $4.2 billion, of which about
$1.2 billion went to Google. The number of apps, downloads, and revenue
from Android apps is growing quickly, and is expected to climb even
higher in coming years.

We recently highlighted the four primary ways to make money with an iPhone app.
Each of those approaches applies to an Android app as well, and most
app makers will use similar monetization strategies for their apps
across platforms.
But
there are some differences between Google Play and the App Store that
are worth considering when building and promoting an Android app. Though
there will be significant overlap with any iOS-based strategy, the two
marketplaces are not nearly as similar as one might suspect. (By the
way, if you’re enjoying this article, you may want to subscribe to our free newsletter; we’ll send monetization tips straight to your inbox each day.)

Android vs. iOS

System

2012

2013

Android

68.8%

78.9%

Apple iOS

19.4%

15.5%

Microsoft

2.7%

3.6%

Other

9.1%

2.0%

For
starters, it’s worth noting that Android has a huge share of the
smartphone market. While many assume that Apple dominates this space,
Android actually holds nearly 80% of the market.
As far as app downloads go, Google also dominates. Android accounted for approximately 75% of all app downloads last year, while the App Store represented just 18% of the total.
But
when it comes to the bottom line, Android apps fall way back. Here’s
the median monthly revenue per app on the different platforms, according
to Vision Mobile:

OS

Median Revenue

iOS

$500 – $1,000

Android

$101 – $200

Windows

$1 – $50

BlackBerry

$201 – $350

The total revenue generated from app downloads is also lopsided, but in favor of Apple:
Yes,
those numbers above are correct. Though Android devices dominate the
marketplace and app downloads, Apple has a huge lead in revenue
generated.
There are several reasons why iPhone apps make so much more money than Android apps overall.

Reason #1: Price Caps

Both
platforms place a cap on what developers can charge for their app.
Apple lets apps sell for up to $1,000, which may seem like a ridiculous
amount to pay for a single download. But there are a few iOSapps apps that charge $999.99, and several more that charge more than the $200 price cap placed on Android apps.

Reason #2: Stronger iOS Presence in U.S.

Though Android dominates globally, Apple has a much stronger presence in the U.S. According to comScore, almost 42% of the U.S. smartphone market is held by Apple with about 52% to Android.
U.S.-based
users tend to be wealthier and are more likely to spend on app
downloads. Many of the Android users are in emerging markets where
spending on paid apps is less common.

Reason #3: Developers Favor iOS

Google
Play also has a much lighter review process than Apple. Once Android
apps are submitted, they’re generally approved very quickly. Apple’s
review takes much longer–often a few days or close to a week before an
app is available.
This might seem like an advantage for
Google, but for most developers trying to create revenue-generating
apps, it can be a bit of a hassle. The lax review standards can lead to
“fake” apps climbing up the charts. Recently, an app called Virus Shield
climbed to the top of the charts, collecting more than 10,000 downloads
at $3.99 each.
The only problem is that the app was a complete scam; it did nothing to protect devices. The only functionality was changing a red “X” to a checkmark when tapped:
The
open strategy Google has taken in its marketplace helps developers get
their apps to market more quickly, but it also opens the door for scams
like Virus Shield to accumulate thousands of downloads. Though the
purchases are all being refunded, these types of scams will make users
more skeptical about paid apps.

Reason #4: Different Audience Values

For
advertisers, getting in front of an iPhone user is much more valuable
than getting in front of an Android user. Some of the best data to
quantify this came from Nanigans,
a large buyer of Facebook ads. They have reportedly seen higher return
on investment and revenue per click (RPC) from iOS devices than from
Android devices.
It’s not a small difference either; according to their data, iOS clicks are worth about 6x more than an Android click to advertisers:

The
simplest explanation for this discrepancy is the difference in the
audience. To make a broad generalization, iPhone users tend to be
wealthier and spend more money than Android users. So their clicks and
eyeballs are worth more to advertisers, which translates into higher
earnings potential for developers on that platform.
There is also some data to support this demographic difference in terms of payments for apps. Flurry Analytics published data
in April 2013 comparing the average prices paid for apps (including
free downloads) across different platforms. On average, an Android
download costs only about 33% as much as an iPhone app and about 12% the
price of an iPad app download:

There
are also some differences in the breakdown of revenue sources for
Google Play compared to the App Store. While both are tilted heavily
towards in-app purchases, this bias is more extreme for Google Play
apps:

App Revenue

Google Play

App Store

In-App Purchases (Free Apps)

98%

92%

Paid Purchases

1%

4%

In-App Purchases (Paid Apps)

1%

4%

Source: eMarketer

This
is further evidence that Andriod users are less likely to purchase an
app. They have a stronger preference towards free apps, and a
willingness to view the ads shown in free versions.

Bottom Line

Though
the major smartphone platforms are similar in many ways, the
monetization opportunities they present in 2015 are still very
different. To summarize, Android users:

Are much more numerous than iPhone users;

Dominate the markets outside of the U.S., especially in Asia;

Have a strong preference for free apps over paid apps;

Are less valuable to advertisers than iPhone and especially iPad users.